ALEXANDRIA, Va.–The NCUA board today approved rules related real estate and occupancy, the Freedom of Information Act, and the Texas Member Business Lending rule.
Occupancy Rule
The board approved 2-0 a final rule amending NCUA’s regulation governing federal credit union occupancy, planning, and disposal of acquired and abandoned premises, and its regulation regarding incidental powers. To provide regulatory relief to FCUs, the final rule eliminates a requirement in the current occupancy rule (formerly referred to as the fixed assets rule) that an FCU must plan for, and eventually achieve, full occupancy of acquired premises. Staff noted that the rule generally retains the current regulatory timeframes for partial occupancy. However, it modifies the definition of “partially occupy” to mean occupation and use, on a full-time basis, of at least 50% of the premises by the FCU, or by a combination of the FCU and a credit union service organization in which the FCU has a controlling interest in accordance with Generally Accepted Accounting Principles. CUSOs must use the space primarily to support the FCU or to serve the FCU’s members.
The final rule also amends the excess capacity provision in NCUA’s incidental powers rule to clarify that an FCU may lease or sell excess capacity in its facilities, but it need not anticipate.
Separately, as part of NCUA’s Regulatory Modernization Initiative, the board voted in favor of finalizing amendments to its regulation governing federal credit union occupancy, planning, and disposal of acquired and abandoned premises, and its regulation regarding incidental powers. To provide regulatory relief to FCUs, the final rule eliminates a requirement in the current occupancy rule (formerly known as the fixed assets rule) that an FCU must plan for, and eventually achieve, full occupancy of acquired premises.
The final rule generally retains the current regulatory timeframes for partial occupancy.
In response to a question from board member Mark McWatters, staff said full occupancy is not required under the rule, meaning up to 49% of a property could be leased.
McWatters also asked what is being done to keep credit unions from speculating in real estate, which he said was the basis for the rule when first enacted, with staff responding that a credit union must request a waiver to move beyond the 49% threshold. “Credit unions are not there to be landlords,” staff told McWatters.
NAFCU President and CEO Dan Berger thanked NCUA for passing the rule.
“NAFCU and our members appreciate NCUA Board Chairman Rick Metsger’s and NCUA Board Member J. Mark McWatters’ leadership granting credit unions much-needed regulatory relief and heeding our recommendations regarding the occupancy rule,” said Berger. “NAFCU has steadfastly advocated for the agency to grant credit unions increased flexibility by lifting the needlessly restrictive occupancy requirements.”
Amendment to NCUA’s Freedom of Information Act
The board voted 2-0 to adopt an interim final rule that amends 12 CFR Part 792 of NCUA’s regulations in accordance with the FOIA Act, which President Obama signed into law on June 30, 2016. The FOIA Act requires agencies to review their FOIA regulations, and by no later than Dec. 27, 2016, issue regulations pertaining to various elements of their FOIA programs. Accordingly, the interim final rule establishes new procedures for NCUA for disclosing records under the FOIA, and for resolving disputes through the FOIA Public Liaison and the Office of Government Information Services within the National Archives and Records Administration.
NCUA’s office of General Counsel said three main revisions were: NCUA must make available to the public in an electronic format information previously available only by copying (NCUA cannot charge fees to certain requesters unless the agency responds within 20 days, and the requester must be informed of unusual circumstances, which gives NCUA 10 more days to comply); NCUA must provide assistance from the FOIA liaison and requesters also now have up to 90 days to appeal a FOIA denial; and requesters who are denied have the right to appeal to the National Archives and Records Administration. Any appeal must also be filed with NCUA's Officer of General Counsel.
Revised Texas Member Business Loan Rule
The NCUA board voted 2-0 to approve a rule that allows Texas-based state charters to make member business loans according to definitions as made by the state regulator.
The NCUA board originally approved the Texas Member Business Loan Rule in November 1999, with changes made to the rule in 2003 and 2004. The State of Texas’ Credit Union Department has now submitted a request for the NCUA board to approve its revised member business loan rule to provide parity with NCUA’s revised rule Part 723.
The agency said its Region IV office had performed a safety and soundness review in which it focused on:
1. Purpose and scope
2. The definitions, including that of associated borrower
3. Board of directors and management responsibilities
4. Written loan policies, including loans to one borrower limit
5. Collateral and security requirements;
6. Construction and development lending
7. Prohibited activities
8. Aggregate member business loan limit, exclusions, and exceptions.
NCUA said its Office of General Counsel performed a legal review and the Office of Examination and Insurance performed a concurrence review.
“While there are variations between this proposed revised rule and Part 723 of NCUA’s Rules and Regulations, we believe the revised rule minimizes the risk and accomplishes the overall objectives of Part 723 of NCUA’s Rules and Regulations,” NCUA staff said. “We do not expect the 2017 rule, as proposed, to cause future safety and soundness concerns. We recommend the NCUA board approve the Texas rule. We believe approval of the Texas Member Business Loan Rule would not result in an unacceptable exposure to the NCUSIF.”